CBS Corp. chief Leslie Moonves has made it clear that Showtime is poised to join HBO in offering a standalone online streaming subscription service “in the not too distant future.”
Speaking Wednesday morning at the Deutsche Bank Media, Internet and Telecom investor conference in Palm Beach, Fla., Moonves said negotiations with digital distributors and traditional MVPDs are in full swing. HBO’s formal announcement on Tuesday of the HBO Now launch next month has accelerated those conversations, he said.
“We’ve been having discussions with the normal suspects,” Moonves said. “I think the floodgates are now open.”
Moonves acknowledged that there is hesitation from some MVPDs who are concerned about a digital-only offering cannibalizing their existing service. But there is no doubt that OTT offerings are joining the parade of pay TV offerings, he said, which will only improve the underlying economics for networks.
“Other than a little bit of consternation (from MVPDs), I don’t see how anybody cannot view this as a positive for HBO and a positive for Showtime,” Moonves said. He also applauded HBO for its “showmanship” in timing the official news of HBO Now launch in partnership with Apple TV with Apple’s unveiling of another cutting-edge product, the Apple Watch.
“What a great platform to introduce your OTT service,” Moonves said.
Moonves’ comments during the 45-minute Q&A ranged from CBS’ improving fortunes in latenight with Stephen Colbert taking over “The Late Show” to the potential for some of the CBS-owned CW and independent stations to profit by taking part in the FCC’s upcoming spectrum auctions. But OTT is the hot topic of the moment, and Moonves emphasized that CBS was positioning itself for the future with the launch of the CBS All Access SVOD platform last October.
“Clearly the bundle is changing. The days of the 500-channel universe are over,” he said “The days of the 150-channel universe in the home are not necessarily over but they’re changing rapidly. People are slicing it and dicing it in different ways.”
Moonves wouldn’t give specifics on the subscriber numbers for CBS All Access to date but said they have been pleased by the response so far. He also noted that the Eye is close to finalizing agreements with its affiliate stations to join in the live streaming offering, which so far has been only available in CBS O&O markets. That will mark a significant national expansion of the “watch live” component of the service, making for a stronger selling point to consumers across the country.
“We are the first (network) to offer our affiliates a piece of the action,” Moonves noted.
Moonves talked up the sunny prospects for CBS in having David Letterman pass the “Late Show” baton to Colbert later this year. Colbert will not earn as much as Letterman did, and the ownership of both “Late Show” and its “Late Late Show” companion will shift from Letterman’s Worldwide Pants to CBS.
That means the network can better monetize the shows through CBS All Access and broad distribution of clips and other material on digital platforms, as well as merchandising. It wasn’t in Letterman’s nature to deliver the kind of viral vid-friendly material that Jimmy Fallon excels at on “The Tonight Show.” But Colbert is a different animal, he said.
“It’s going to be a very different audience for us” with Colbert, Moonves said. “He’s coming to us at the perfect time. We have the monetization online in place and social media is really expanding … The show will cost less. We see real potential for upside for profit (in latenight) in the next few years.”
CBS is also seeing improving economics in other areas. “Two and a Half Men” was the most expensive show on its air, and now it has signed off. The CBS network’s schedule is so strong that execs were able to pare down to 17 pilots this year, rather than 20-22 in previous years. He acknowledged that critics yawn at CBS’ fondness for spinoffs such as this year’s “NCIS: New Orleans” and “CSI: Cyber” but he emphasized that “these are billion-dollar franchises for us.”
On the question of the 2016 spectrum auction, Moonves said the numbers were getting so big that CBS has no choice but to pay attention. He suggested that CBS would be open to selling off a portion of the spectrum now allotted to some of the 14 CW and independent stations it owns because those stations typically don’t carry live sports or the kind of events that need the highest levels of bandwidth to deliver an HD signal.
“There’s a lot of money available,” he said, citing other FCC auction prices that have started in the $200 million range. “We’d be dumb if we didn’t take a big chunk of it.”
Among other tidbits from the session:
- The Eye is open to shedding some of its radio station holdings in mid-sized markets: “Trimming some of that would be a good idea for us,” he said.
- The scatter advertising market is picking up after a rough third and fourth quarter. “Volume has gone up quite a bit,” he said.
- Moonves didn’t address (nor was he asked) about the speculation regarding CBS Corp.’s long-term future following the death of Sumner Redstone, the 91-year-old once controlling shareholder of CBS and Viacom. But he did stress that he does not feel pressure to expand CBS Corp. even at a time of pending mega-mergers among distributors such as Comcast-Time Warner Cable and AT&T and DirecTV. “I don’t see any way that we consolidate in the near or distant future unless (it is) under terms that are really favorable to us,” he said.